Drive by new products and lowering prices, the Brazilian soft drinks market is expected to expand by just over 9% in 2003, according to a report relaeased yesterday.

Research from the drinks analyst Canadean shows that Brazilian soft drink consumption increased by 10% in 2002, taking the rise to 190% over the last decade.

Carbonates is easily the most important sector and Brazil is the third biggest global market for carbonated drinks, exceeded only by the US and neighbouring Mexico. Although carbonates only increased by a comparatively modest 2% in 2002, it is a huge and well-established sector. Cola accounts for a little under 45% with Guarana in second place on 27%.

This said, multinational producers are increasingly diversifying into new flavours. Brazil's soft drinks market in general is characterised by a very large number of independent regional producers. However, due to the high costs involved, these smaller players are not expected to undertake such widespread expansion. Low calorie carbonated drinks are growing in popularity, driven by the trend towards healthier living.

Although still drinks is one of the smaller sectors, it is the most dynamic in the market. Consumption increased by 34% in 2002 alone and the sector has now grown by well over 1,100% since first appearing in 1998. Fruit drinks dominate, led by orange/citrus which enjoys a 75% share of throat.

The second and third largest sectors, namely packaged water and bulk/HOD water, also grew strongly. Consumption of both sectors has been helped by the popularity of healthy products. In addition, competition between the vast number of packaged water brands has resulted in extremely competitive pricing. Bulk/HOD water is also highly fragmented with over 300 brands available. The penetration of coolers in the workplace and at home has increased with producers leveraging the combined propositions of price, personal service and reliable delivery.

Fruit powders rose sharply for the second year running. With the top six brands accounting for almost 90% of total consumption, the sector is far less fragmented than many of its rivals. Furthermore, pricing of fruit powders is among the lowest in the whole of the soft drinks market.

Although consumption of soft drinks has risen sharply, and explosively in the case of certain sectors, this trend looks like continuing with only a slight slowdown expected in the short term.

"The market should be buoyed further by new products and market entrants - expanding choice and lowering prices. The number of convenience stores is on the up, supporting 'on-the-go' consumption, whilst vending machines are becoming more commonplace. The food service industry is also accelerating. Canadean believe that all of these factors will help fuel future growth and predict that the total market will increase by just over 9% in 2003," said Canadean.